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EU suspends funding to Hungary, citing corruption concerns, amid opposition to stance on Ukraine

Prime Minister Viktor Orban’s call for a new strategy on the Russia-Ukraine war is contrary to the EU’s view. The Orban government has been criticised by European bodies and watchdogs for undermining checks and balances in Hungary.

September 19, 2022 / 06:34 PM IST
(Representative image: Reuters)

(Representative image: Reuters)

The European Union (EU) has decided to suspend funds worth 7.5 billion euros to Hungary, the strongest European critic of EU’s Ukraine policy and an opponent of reducing gas imports from Russia to the continent, over corruption concerns.

Hungarian Prime Minister Viktor Orban in recent months has said the EU needs a new strategy on the war in Ukraine as punitive sanctions against Russia have not worked.

“A new strategy is needed which should focus on peace talks and drafting a good peace proposal instead of winning the war,” Orban said.

His views are contrary to the official EU view, which is upbeat about Ukraine and its recent string of successes against Russian troops.

On Sunday, the European Commission proposed suspending funds allocated to Hungary over rule-of-law concerns.


Opponents of the nationalist Hungarian prime minister, who won a fourth election in April, accused him of undercutting EU rules and using its funds to enrich his cronies.

Door left open for compromise

“Today’s decision is a clear demonstration of the Commission’s resolve to the protect the EU budget and to use all tools at our disposal to ensure this important objective,” Budget Commissioner Johannes Hahn told reporters.

With the proposal, the Commission is recommending the suspension of 65 percent of funds allocated to Budapest under three EU programmes of its cohesion policy.

Even though the Commission proposed the suspension of the funds to Hungary, it also laid the ground for a possible compromise that would allow Budapest to keep the money.

Observers said this in effect meant that the EU executive was expecting Hungary to implement “gamechanger” anti-corruption reforms.

Hahn praised 17 reform measures the Hungarian government was committed to, saying: “With these measures Hungary has made important and public commitment in the right direction.”

But he cautioned that the EU’s rule-of-law mechanism is not a one-off and if Budapest failed to live up to its promise, the process could be restarted by the Commission.

Rule-of-law problems

Over the past decade, the Orban government has been criticised by European bodies and watchdogs for undermining checks and balances in Hungary. The ruling party has been accused of influencing the judiciary, keeping tight control over the media, and of rampant corruption.

But Brussels had few tools to deal with a member country’s backsliding until in 2020, it created a new mechanism that allows it to suspend funds over systemic rule-of-law problems.

The new mechanism was used against Hungary in April with the Commission’s inquiry focused on problems with public procurement and shortcomings in investigating corruption,

Member-states have to decide on adopting the Commission’s suggestions within three months.

The Polish government had also been in the Commission’s crosshairs over rule-of-law issues. But it said it would resist if attempts were also made to suspend its funds.

It has not been named by the Commission so far.

Polish stand

The Polish government has been a strong proponent of supporting Ukraine in the war against Russia.

Poland said it would strongly oppose any European institutions that tried to deprive member-states of funds.

The Commission and Hungarian officials have been engaged in negotiations to resolve the issue and get the pending funds released.

Budapest has put forward a set of proposals that could reduce the risks of corruption.

But the Commission said pending the fulfillment of its key implementation steps, the risk for the budget remains at this stage

“The Commission will monitor the situation and keep the Council informed of any relevant element which may have an effect on its present assessment,” it said.

Orban’s anti-war stance

While Hungary’s lack of transparency in dealing with corruption and proper utilisation of EU funds have been cited as reasons for the suspension, Orban’s pro-Russian views have also soured relations between Budapest and Brussels.

Alhough Hungary is a NATO member, Orban has repeatedly said that his country would stay out of the war in Ukraine—a view that has not gone down well with other EU members at a time when most of Europe has united against Russia.

Orban has not only refused to reduce the Russian gas supply as his country’s economy is dependent on it, he has also been critical of EU’s policy on Ukraine.

He said the current strategy on Ukraine has failed as governments in Europe were collapsing while trying to deal with surging energy prices.

Orban said Ukraine will never win the war because the Russian army has “asymmetric dominance.”

The Hungarian PM suggested that Russia and the United States should negotiate to bring an end to the war, arguing that only talks between the two can end the conflict. He said the security guarantee that Moscow is seeking can only be given by Washington.

The views expressed by Hungary could be dismissed for now as the EU is enthused with Ukraine’s recent victories against the Russian army.

But as the war stretches into the winter, the reduced Russian gas supply and soaring energy prices are likely to affect both the industries and the common people in Europe.

Orban’s views might then find much wider support outside Hungary.
Pranay Sharma
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